Key Trends in the Small Business Health Insurance Market

Written by: Christina Merhar
Originally published on October 6, 2015. Last updated July 8, 2022.

Employer-sponsored health insurance looks a lot different for small businesses than for larger businesses. How so?

For one, small businesses are much less likely to offer health insurance than larger employers. Additionally, small businesses have unique characteristics in health insurance costs, coverage, and benefits.

The annual Kaiser Family Foundation (KFF) and Health Research & Education Trust (HRET) 2015 Employer Health Benefits Survey provides insights on employer-sponsored health insurance in America. Here’s a look at key market trends specific to small businesses in America.

Only 54% of Small Businesses Offer Health Insurance

According to the KFF/HRET annual survey, only 54 percent of small businesses (with three to 49 employees) offer traditional health insurance whereas 97 percent of larger employers (with 100+ employees) offer health insurance.

Chart source - KFF/HRET Survey

The survey also found the smaller the business, the less likely they are to offer health insurance. As the chart shows below, only 47 percent of micro businesses (with three to nine employees) offer health insurance.

Chart source - KFF/HRET Survey

On Average, Small Businesses Pay $5,264/year for Single Coverage (85 percent)

For small and medium-sized businesses (three to 199 employees) offering health insurance coverage, the annual average premium in 2015 is:

  • $6,163/year for single coverage

  • $16,625/year for family coverage

These premium amounts, of course, are split between the employer and employee. On average, small and medium-sized businesses pay $5,264/year (85 percent) for single coverage and $10,720/year (65 percent) for family coverage. 

Chart source - KFF/HRET Survey

PPOs and HDHPs Are Most Popular Plan Types

What kind of health plans are most popular with small and medium-sized businesses? According to the survey, PPOs and HDHPs.

Forty-one (41) percent offer a PPO, 24 percent offer an HDHP (with or without a savings account option), 19 percent offer a POS, 15 percent offer an HMO, and only 2 percent offer a conventional plan.

Related: Four Common Types of Health Insurance Plans

Compared to larger businesses, small and medium sized businesses are much more likely to offer an HDHP (19 percent compared to six percent of larger employers).

Chart source - KFF/HRET Survey

63% of Small Business Employees Have an Annual Deductible of $1000 or More

Employees of small and medium-sized businesses are much more likely to have a high deductible. As the chart below shows, 63 percent of covered employees of smaller businesses have at least an $1000 annual deductible, compared to only 39 percent of employees at larger businesses.

Related: The High Deductible Nightmare - A Change in Healthcare Trends

Chart source - KFF/HRET Survey

34% of Small Business Employees Covered Under a Grandfathered Health Plan

The survey also found that employees of small and medium sized businesses are more likely to be covered under a grandfathered health plan - 34 percent compared to 22 percent at larger businesses.

Chart source - KFF/HRET Survey

49% of Small Businesses Offering a Wellness Program

Lastly, are small and medium businesses adopting wellness programs? According to the survey - yes, although not as rapidly as large businesses. As shown in the chart below, 49 percent of employers with three to 199 employees offer at least one wellness program, compared to 81 percent of larger employers.

Chart source - KFF/HRET Survey


As the health insurance market changes for small and large employers alike, this annual snapshot provides insight to the challenges and opportunities for small and medium-sized businesses.

What stands out to you? What questions about small business health insurance do you have? Join the conversation below.

Originally published on October 6, 2015. Last updated July 8, 2022.


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